Municipal CryptoCurrency

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Municipal CryptoCurrency Case Studies

Dubai is currently the only city in the world that has started to implement its own cryptocurrency, emCash. In the US, the cryptocurrency proposal of the city of Berkeley attracted the most attention from the media. There is no city in the world that is using or considering using Bitcoin as its civic cryptocurrency. This is probably because Bitcoin is already created and it cannot be accommodated to fit the needs of the government. It could also be because Bitcoin is somewhat controversial, as it has received a lot of bad press in the past because it was being used for some illegal activities. However, The Town of Innisfil in Canada and the state of Ohio in the US are accepting Bitcoin for tax payments.

City of Berkeley

  • The city of Berkeley, California is planning to go ahead with an Initial Coin Offering (ICO) for the city’s cryptocurrency, which does not have an official name yet. Even though the exact launch date is not known yet, it is expected to be launched in late 2019.
  • The cryptocurrency will be backed by municipal bonds. The money raised by crowdfunding through the ICO will be used to fund city-issued municipal bonds.
  • The funds generated by those bonds will be used to pay for affordable housing, homeless shelters, ambulances and street plantings.
  • Owners of the coin will be able to spend the cryptocurrency in local businesses, and people are also considering using it as an apartment rent payment method.
  • Mayor Jesse Arreguín and Vice Mayor Ben Bartlett are trying to make the municipal bonds more accessible to all citizens. This can be achieved through cryptocurrency, because bonds that are usually issued in denominations of at least $5,000 can be split into cryptocurrency tokens denominated in as little as a few dollars.
  • Bartlett compared the proposal to a "non-profit, special-purpose vehicle, meant to fund social good".
  • The system would work in such a way that the bonds would be sold directly to citizens via the cryptocurrency tokens. This would mean that underwriters would be excluded from the transaction and the total transaction costs would be reduced.
  • While the cryptocurrency is still in the approval stages, implementing it could result in a way for one of the so-called "sanctuary cities" to continue to receive funding for homeless shelters and affordable housing even after restrictive funding measures proposed by the Trump administration are implemented.
  • Funding affordable housing is especially important, since that type of funding has already been undermined by the implemented tax cuts.


  • The official credit bureau of the United Arab Emirates, emcredit, run by the Dubai Department of Economic Development, announced in 2018 that it will launch emCash, a city cryptocurrency, some time in 2019.
  • Dubai citizens will be able to use emCash for "retail payments in-store, to pay for government utilities, telecommunication, and school fees in government shopfronts", the official press release stated.
  • emcredit partnered with Pundi X, and Ebooc Fintech & Loyalty Labs to deliver digital payments to its citizens.
  • Pundi X has already started supplying digital payments devices called xPOS to retailers across Dubai. The devices will also be installed in offices of the government.
  • Dubai residents use the digital currency via a smartphone app emPay which communicates with xPOS devices.
  • "To be the world's first city to offer blockchain-based payment solutions to our residents is an exciting moment for Dubai. It confirms Dubai's status as an international tech hub. Deploying cutting-edge technology such as blockchain is a key priority and is delivering benefits to our citizens in the form of convenience and securities to customers and merchants across Dubai," a spokesperson for emcredit said.
  • Additionally, in 2017, the Smart Dubai office, a government initiative led by the Crown Prince of Dubai, has approved a "citywide blockchain payments platform" that will connect all 38 government entities to increase the efficiency and transparency of the government.
  • Experts expect that emCash and the government blockchain payments platform will be integrated in some way in the future.
  • The initiative is still in its early stages and it still did not produce concrete results. In fact, the Dubai Telecommunications Regulatory Authority gave the final approval for the installation of xPOS devices as recently as May 1, 2019. The devices can now officially be connected to a blockchain network and used for processing payments.

Lafayette Parish

  • Lafayette Mayor-President Joel Robideaux proposed early last year that the parish create a "Bitcoin-like" cryptocurrency.
  • Robideaux described the parish as a technological hub that would benefit from attracting people interested in emerging technologies like blockchain and cryptocurrency.
  • The proceeds of the cryptocurrency ICO would be used to "build a living lab of blockchain researchers and developers," according to Robideaux.
  • Even though the announcement attracted a lot of interest at the moment, the initiative has never been mentioned in the media since then.

Innisfil and Ohio

  • In April 2019, the Town of Innisfil, Canada started accepting Bitcoin for property tax payments as part of a one-year pilot program.
  • The town partnered with Coinberry, that created a cryptocurrency payment processing solution called Coinberry Pay.
  • Coinberry will handle the payments and instantly convert them to Canadian dollars which will then be transferred to the municipality.
  • "There’s no doubt that cryptocurrency is growing in usage and popularity. By getting into this now, we are making sure our municipality is ahead of the game, and signaling to the world that we truly are a future-ready and innovative community,"Innisfil mayor Lynn Dollin said.
  • Similarly, Ohio became the first US state to accept Bitcoin for tax payments.
  • Ohio partnered with Bitcoin payment processor BitPay that will convert Bitcoin to dollars and then transfer them to Ohio, exactly like Coinberry.

Prague and Buenos Aires

  • Prague and Buenos Aires are considered to be the most crypto-friendly cities in the world.
  • The two cities have the most vendors that accept Bitcoin in the world. Prague has 147 businesses that accept Bitcoin payments, while Buenos Aires has 141.
  • Trailing the two cities are San Francisco (117), Madrid (101) and New York City (101).
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Municipal CryptoCurrency Overview

Municipal, or civic, cryptocurrencies are digital currencies that rely on cryptography for security and that are issued by municipalities. Most often, municipal cryptocurrencies are backed by some city asset. Municipal cryptocurrencies can help cities increase the efficiency of the government and to raise more funds. However, municipal cryptocurrencies come with increased cybersecurity risks and a possibility for exacerbating wealth inequality. Since the concept of municipal cryptocurrencies is so closely linked to cryptocurrencies in general, cryptocurrencies and bitcoin are explained first, to provide a background for the details about municipal cryptocurrencies.


  • Cryptocurrencies are digital currencies that rely on cryptography for security.
  • Complex cryptographic protocols ensure that cryptocurrencies are practically impossible to counterfeit. The successful counterfeiting of cryptocurrencies would require solving mathematical problems that the world’s most powerful computers would take decades to solve.
  • Most cryptocurrencies rely on blockchain technology for record-keeping.
  • Blockchain is a distributed, decentralized, public ledger that is maintained by a disparate network of computers.
  • Cryptocurrencies owe their features of immutability and transparency to Blockchain, or other Distributed Ledger Technology (DLT).
  • Cryptocurrencies often have a limited supply that is predetermined by a mathematical formula. They are also often open-source, which means everyone can read their code and know the “rules of the game” upfront.
  • This, and the fact that increasing the supply usually involves a lot of computing power (electricity) is what makes cryptocurrencies scarce and, therefore, desirable.
  • The predictable, scarce supply coupled with transparency is what gives users confidence in the value of cryptocurrencies. Ultimately, though, cryptocurrencies are most often backed by nothing more than the faith of their users, exactly like fiat money.


  • Bitcoin, created at the start of 2009 in the aftermath of the financial crisis, is the world’s first blockchain-based cryptocurrency.
  • Bitcoin is the world’s first digital currency to solve the double-spending problem. This was the first time that something completely digital was also unique and uncopyable. This is how the invention of Bitcoin introduced the property of scarcity to the digital world.

Municipal cryptocurrencies

  • A municipal, or civic, cryptocurrency is essentially any cryptocurrency issued (coded) by a municipality like a city.
  • Unlike most standard cryptocurrencies which are backed by faith, municipal cryptocurrencies are likely backed by some city asset.
  • Cities are creating cryptocurrencies for a variety of reasons. Some, like certain cities in Sweden, are aiming for a cashless society and see cryptocurrencies as a way to achieve that. Others, like Dubai, want to make the government more efficient and the budgeting of funds more transparent through cryptocurrencies.
  • However, most often cities are using cryptocurrencies to open up new ways for citizens to invest in them. This helps cities raise funding for projects that previously could not have been afforded.
  • Cities are using civic cryptocurrencies to fund infrastructure projects, to fund welfare programs, to encourage local spending and the local economy and to enahance the efficiency of the government.
  • Cryptocurrency is issued to citizens when they buy municipal tokens. The local government receives the funds for various projects, while the citizens receive tokens which can then be spent at local businesses.

Benefits of municipal cryptocurrencies

  • The previously mentioned transparency of cryptocurrencies is a major benefit for any organization that needs to raise funds from the public. People have much more confidence in giving money to causes that can clearly show how that money is being used.
  • Cryptocurrency can also make investments such as municipal bonds more accessible to a wider group of investors. Normally, municipal bonds are issued at thousands, or even millions of dollars. By converting them into tokens, cities can lower the barrier to entry to as little as a few cents.
  • If you tokenize these bonds, then it’s possible for the average person to make a small investment,” Campbell Harvey, a cryptocurrency professor at Duke University, stated.
  • Cryptocurrencies inherently support transactions between peers and cutting out middlemen can go a long way towards reducing the administrative burden of fundraising for a local government.

Drawbacks of municipal cryptocurrencies

  • One of the major drawbacks of creating municipal cryptocurrencies is the possibility of creating a financial bubble. Like with any new investment vehicle, there is a possibility that investors will be attracted by the novelty of municipal cryptocurrencies, but that they will quickly lose interest once the novelty has worn off.
  • Sheila Warren, project head of blockchain and distributed ledger technologies at the World Economic Forum, warned that there is a risk of financial panics arising out of municipal cryptocurrencies. Cities should implement safeguards used by traditional financial institutions to keep panics from occurring.
  • There is a cybersecurity risk associated with cryptocurrencies. If cities do not set up their municipal cryptocurrencies in the right way and make them secure, there is a possibility that they will be hacked.
  • There’s a lot of variables here in terms of how [cities] set up their blockchain, but essentially think of somebody going in and stealing the tokens, creating transactions for residents who don’t know their tokens are being taken, and then dumped,” Harvey stated.
  • Another drawback is that cities need to help their citizens trust cryptocurrencies. While some citizens might be attracted by the novel idea, others might be put off by the unexplored territory.
  • The new investment model of municipal cryptocurrencies could increase wealth inequality in cities. Paradoxically, funding projects that help struggling communities creates wealth for the wealthy.
  • “Over time, we have to think about what it means if we’re really creating and adding to stratification of society through the processes we’re using to alleviate those issues,” Warren stated.
  • Municipal cryptocurrencies can also exacerbate the inequality between cities, because cities with advanced technological and financial industries are better positioned to experiment with civic cryptocurrencies. Since those cities tend to already be wealthy, further innovation will tend to widen the gap between them and their smaller counterparts.

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City Currency Case Studies

Three examples of municipal currencies are Bay Bucks of Traverse City, Michigan; Ithaca Hours of Ithaca, New York; and BerkShares of The Berkshires, Massachusetts. All of these local currencies were founded with roughly the same goal in mind: to strengthen the local economy and shield it from the whims of the national and global economies. While Bay Bucks and Ithaca Hours have faded into irrelevance, BerkShares are still active and successful.

Bay Bucks

  • Bay Bucks are the local currency of Traverse City, Michigan.
  • The currency was founded in 2005, and, while it initially enjoyed some degree of success, it has fallen out of fashion and, while technically still active, is now largely defunct.
  • Bay Bucks were founded to promote and encourage participation in the local economy as well as to attempt to insulate it from the ups and downs of the national economy, "in addition to being fun."
  • Bay Bucks are in denominations of 1, 5, 10, and 20, and are tied to (and directly exchangeable with) the US dollar.
  • The currency can be utilized "exclusively at participating Traverse City businesses, with the goal of keeping money within the community and stimulating the local economy."
  • The way participating businesses have interacted with Bay Bucks varies: some allow Bay Bucks to be used for any purchase at any time, while others only accept them on a certain day of the week; and some use them to pay employees, with employees' permission.
  • Participating businesses use Bay Bucks for petty cash, as banks do not accept deposits in the local currency.
  • While Bay Bucks have declined in popularity, a new initiative is seeking to create a digital version of Bay Bucks, which its proponents believe will be more successful due to a general preference for cashless (e.g. credit card) purchases.

Ithaca Hours

  • Founded in 1991 by Paul Glover, Ithaca Hours of Ithaca, New York are generally considered the first modern local currency of their kind, inspiring others across the country.
  • Glover founded Ithaca Hours with the hopes of invigorating local businesses by keeping currency in the community, as well as shielding the community from the volatile global economy.
  • The "hour" name comes from the currency's value: it is equal to 10 US dollars, the average hourly wage in Ithaca at the time, and could one Ithaca Hour could, in theory, be used in exchange for an hour of labor, such as babysitting services or odd jobs.
  • Ithaca Hours were highly successful in the mid- to late-1990s, but in the early 2000s their use declined, and, like Bay Bucks, they are still technically active but are mostly consigned to irrelevance (especially because Glover, their founder and main proponent, moved away from Ithaca).
  • As mentioned above, Ithaca Hours could be used to pay for an hour of labor, but were also widely adopted by local merchants to purchase goods.
  • Ithaca Hours come in five denominations: "2 Hour, 1 Hour, ½ Hour, ¼ Hour, 1/8 Hour." It is backed "only by its acceptance within the local community."
  • In another similarity to Bay Bucks, there has been a recent effort to resurrect local Ithaca currency in digital form, though in this case the new digital currency is called "Ithaca Dollars," founded by a company called Ithacash.


  • Founded in 2006, Berkshares are the local currency of The Berkshires in Massachusetts. The Berkshires is a region encompassing several towns, and BerkShares can be used in any participating business within them.
  • BerkShares were first established to "serve as a tool for community economic empowerment, and development toward regional self-reliance," principally by maximizing "the circulation of goods, services, and capital" within the Berkshire region.
  • One BerkShare is the equivalent of one US dollar, and while the currency has achieved buy-in from local banks (a feat that other local currencies like Bay Bucks never achieved), the exchange rate at participating banks is 95 cents per BerkShare, giving consumers "a small bonus" for exchanging dollars into BerkShares while discouraging them from exchanging BerkShares into dollars.
  • BerkShares are more successful than the two case studies discussed above, as they are still widely in circulation and utilized by an impressive total of about 400 businesses. Also, as mentioned above, consumers can exchange dollars for BerkShares at many local banks, such as Adams Community Bank, increasing accessibility and incentive to use the local currency.

Your research team employed the following strategy:

To find information about localities that have implemented a municipal currency, we first conducted a generalized press search to locate examples of such currencies. After finding several examples, we executed a deeper dive on each, ultimately selecting the three above due to the breadth of available and accessible information regarding them. We used both organizational sources and press sources to provide information regarding each, such as the year in which they were founded, the motivations for starting them, and the degree to which they were successful.

From Part 03
  • "Many folks are surprised to learn that local currencies like Bay Bucks, are perfectly legal and potentially very useful in giving the region's economy what "Going Local" author Michael Shuman calls a "Keynesian bounce." The beauty of local currencies is their limited recognition. Bay Bucks can't leave our locale except as souvenirs, as they are generally not accepted elsewhere."
  • "Since Traverse City’s own locally-based currency, Bay Bucks, debuted in 2005, the monetary system has struggled to find widespread traction in the marketplace. Only a handful of businesses still accept the printed bills, the Bay Bucks board of directors has sat dormant for several years, and many residents don’t realize the currency is still in circulation – if they were even aware Bay Bucks existed at all."
  • "Bay Bucks – available in denominations of $1, $5, $10, and $20 – were initially greeted with excitement when they first launched 14 years ago. Individuals could trade in U.S. dollars for Bay Bucks on a one-to-one basis; Bay Bucks could then be spent exclusively at participating Traverse City businesses, with the goal of keeping money within the community and stimulating the local economy. But Sparks and Nance say that following the program launch, several of the initial champions of Bay Bucks either passed away or moved on to other communities or projects, leaving a lack of enthusiastic advocates who would aggressively market the program and enlist businesses and consumers to participate."
  • "Because the government views local currencies as a cash equivalent, no special accounting procedure is needed. However, until Bay Bucks are accepted for deposit at area banks, you will need to total these separately from U.S. Currency. Many businesses count and use local currency as petty cash."
  • "Some businesses accept 100% Bay Bucks for a transaction and are able to spend them as quickly as they earn them. Other businesses may choose one day a week or some specific service or item for which they accept 100% Bay Bucks. If you run a business that plans to accept Bay Bucks, you'll want to set a reasonable acceptance policy."
  • "There are plenty of reasons we're doing this but high on my list is helping in a small way to make this region I love more resilient in the face of the kind of troubles that befall a country that's trying to sustain itself on the root of all evil which, the apostle Paul said, is the love of money. Money is not an end but a means. What we need is not money per se, but a local economy with a good circulatory system, where money's flows strengthen and reinforce the economy's vital functions."
  • "In addition to being fun, and a very particular kind of supplement to the existing money flows in our area, it's hugely educational (ask any Bay Bucks board member) and a fine opportunity to get involved in growing a local economy that can endure and be more suited to the coming realities of reduced consumption and greater self-reliance."
  • "The Ithaca HOUR is a currency issued and used in the locality of Ithaca, NY. It is designed to encourage patronage of local businesses in Ithaca and to prevent that money from leaving the local economy. The United States government does not back it, and companies in Ithaca are not required to accept it."
  • "In 1991, Paul Glover launched the new Ithaca currency and set the value of an HOUR at $10. This new value was the approximate average hourly pay in Ithaca at the time. Glover hoped that the HOURS project would keep money in the local economy, and avoid the social and economic costs which he associated with the increasingly global financial system."
  • "The rise in electronic payment systems, plus Glover’s departure from Ithaca, contributed to a steady decrease in the use of HOURS in the early 2000s. Efforts to revive the currency have yet to take hold. In recent years, an organization known as Ithacash has attempted to introduce internet-based local money that they have named Ithaca Dollars."
  • "There are 5 types of Ithaca Hours banknotes; 2 Hour, 1 Hour, ½ Hour, ¼ Hour, 1/8 Hour. 1 Hour is equivalent to 10 dollars and it can be exchanged for an hour labor. At that time, 10 dollars is the average amount of labor wages per hour."
  • "Dubbed a “great economic experiment" by The New York Times, BerkShares are a local currency for the Berkshire region of Massachusetts. Federal currency is exchanged for BerkShares at sixteen branch offices of four local banks and spent at 400 locally owned participating businesses. The circulation of BerkShares encourages capital to remain within the region, building a greater affinity between the local business community and its citizens."
  • "In the summer of 1992 seventy Main Street businesses got together through the Main Street Action program of the Chamber of Commerce to issue BerkShares. During a six-week period BerkShares were given away to customers shopping in the participating stores-one BerkShare for every ten dollars of purchase. Every store signed the back of each BerkShare before it was issued so that we could track the source."
  • "Anyone in the Berkshire Region may spend BerkShares or accept BerkShares for payment. BerkShares can be obtained at participating bank branches in exchange for U.S. dollars at a rate of 95 cents per BerkShare. These federal dollars remain on deposit at the BerkShares Exchange Banks in order to allow citizens to redeem BerkShares for dollars at the same exchange rate."